Question

NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $84 comma 600, and the project is expected to yield after-tax cash inflows of $9 comma 000per year for 15years. The firm has a cost of capital of 13%.

a. Determine the *net present value (NPV)* for the
project.

b. Determine the *internal rate of return (IRR*) for
the project.

c. Would you recommend that the firm accept or reject the project?

Answer #1

NPV and IRR
Benson Designs has prepared the following estimates for a
long-term project it is considering. The initial investment is
$43,760, and the project is expected to yield after-tax cash
inflows of $7,000 per year for 10 years. The firm has a cost of
capital of 14%.
a. Determine the net present value (NPV) for the project.
b. Determine the internal rate of return (IRR) for the
project.
c. Would you recommend that the firm accept or reject the...

NPV and IRR Benson Designs has prepared the
following estimates for a long-term project it is considering. The
initial investment is $26,940, and the project is expected to
yield after-tax cash inflows of $3,000 per year for 14 years. The
firm has a cost of capital of 8%.
a. Determine the net present value (NPV) for the project.
b. Determine the internal rate of return (IRR) for the
project.
c. Would you recommend that the firm accept or reject the...

NPV and IRR???Benson Designs has prepared the following
estimates for a? long-term project it is considering. The initial
investment is ?$46,760?, and the project is expected to yield?
after-tax cash inflows of ?$5,000 per year for 14 years. The firm
has a cost of capital of 9?%.
a.??Determine the net present value? (NPV) for the project.
b.??Determine the internal rate of return? (IRR) for the
project.
c.??Would you recommend that the firm accept or reject the?
project?

Your firm is considering a project that has an NPV of $32,600,
an IRR of 9.5 percent, and a payback period of 8.9 years. The
required return is 9% and the required payback period is 9 years.
Which one of the following statements correctly applies to this
project?
A) The net present value indicates accept while the internal
rate of return indicates reject.
B) The payback decision rule is sufficient in making the
decision about the project.
C) The payback...

. (NPV,IRR)A company can invest $1,600,000 in a capital
budgeting project that will generate the following forecasted cash
flows:
Year Cash flow
1 $500,000
2 720,000
3 300,000
4 600,000
The company has a 13% cost of capital.
a. Calculate the project’s net present value.
b. Calculate the project’s internal rate of return.
c. Should the firm accept or reject the project?
d. What is the value added to the firm if it accepts this
proposed investment?

Payback, NPV, and IRR Rieger International is evaluating the
feasibility of investing
$95 comma 00095,000
in a piece of equipment that has a
55 -year
life. The firm has estimated the cash inflows associated with
the proposal as shown in the following table:
LOADING...
. The firm has a
99 %
cost of capital.
a. Calculate the payback period for the proposed investment.
b. Calculate the net present value (NPV) for the proposed
investment.
c. Calculate the internal rate of...

Understanding the IRR and NPV
The net present value (NPV) and internal rate of return (IRR)
methods of investment analysis are interrelated and are sometimes
used together to make capital budgeting decisions.
Consider the case of Blue Hamster Manufacturing Inc.:
Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of
its planning and financial data when both its main and its backup
servers crashed. The company’s CFO remembers that the internal rate
of return (IRR) of Project Delta is 11.3%,...

(NPV,
PI, and IRR
calculations)
Fijisawa Inc. is considering a major expansion of its product
line and has estimated the following cash flows associated with
such an expansion. The initial outlay would be
$2 comma 000 comma 0002,000,000,
and the project would generate incremental free cash flows
of
$600 comma 000600,000
per year for
77
years. The appropriate required rate of return is
66
percent.a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
d. Should this project...

2. A company is considering a project that has the following
cash flows: C0 = -3,000, C1 = +900, C2 = +500, C3 = +1,100, and C4
= +1,900, with a risk-adjusted discount rate of 8%. A) Calculate
the Net Present Value (NPV), Internal Rate of Return (IRR),
Modified Internal Rate of Return (MIRR), and Profitability Index
(PI) of this project. B) If you were the manager of the firm, will
you accept or reject the project based on the...

Payback, NPV, and IRR: Rieger International is evaluating the
feasibility of investing
$96,000 in a piece of equipment that has a 5-year life. The
firm has estimated the cash inflows associated with the proposal as
shown in the following table: The firm has a 8% cost of
capital.
a. Calculate the payback period for the proposed
investment.
b. Calculate the net present value (NPV) for the proposed
investment.
c. Calculate the internal rate of return (IRR), rounded to
the nearest...

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